Righteous rage

The Catholic Church’s betrayal of children

Barney Zwartz

Still Standing

by Chrissie Foster, with Paul Kennedy Viking $35 pb, 336 pp

This is a book about rage, as Chrissie Foster says in her opening sentence. It is motivated and driven by rage and, if this is not an oxymoron, it is a panegyric to rage.

Few people could have more cause for rage than Foster, two of whose three daughters were raped at primary school in Melbourne by Catholic priest Kevin O’Donnell, a paedophile monster about whom the Catholic Archdiocese of Melbourne knew for fifty years yet did nothing. One of Chrissie’s daughters, Emma, took her own life, while the second, Katie, who turned to drink to cope, was left in a wheelchair after a car crash.

As religion reporter for The Age, I often sat alongside the Fosters in the 2013 Victorian Parliamentary Inquiry into how institutions responded to child abuse, which they attended throughout. I knew the rage must be smouldering inside – it would be impossible not to be – but I was constantly impressed by their quiet, stoic dignity and the calm, rational way their passion was expressed.

Nor have I ever forgotten Chrissie’s powerful account in her earlier book – also written with Paul Kennedy, Hell on the Way to Heaven (2011) – of the Fosters’ meeting with Archbishop George Pell in 1997. According to her husband, Anthony, who died in 2017, the future cardinal showed a sociopathic lack of empathy. The Fosters were shown into a cramped furniture storage room in the presbytery and given a small wooden bench for both of them to sit on. The only other seat was a throne-like red leather armchair in which Pell stretched out in a way they found intimidating. He told them that if they didn’t like the $50,000 offer under the church’s Melbourne Response abuse protocol they could take the church to court.

The Fosters did, whereupon the Catholic Church denied the rapes, despite their own investigator having confirmed them. The church settled before judgment for $450,000 for Emma plus more in compensation for Katie. Rage? How on earth could it be otherwise?

Paradoxically, there is something dispassionate about Foster’s fury – it is always contained, her criticism is biting but proportionate, and that restraint adds to the intensity.

Still Standing is a scorching but justified excoriation of the Catholic hierarchy in Rome and Australia with a couple of honourable exceptions – the late George Pell, whose supporters always painted him as an unflinching hero of the fight against abuse, not among them. Some may even have believed that Pell champi- oned victims. In fact, as Pell himself admitted, his top priority was protecting the assets and reputation of the Church (both of which causes he ended up damaging), and he offered victims nothing but pro forma and emotionless expressions of regret. The book is the case for the prosecution, and it is powerful and moving, filled with telling details.

The future cardinal showed a sociopathic lack of empathy

Still Standing is far from the first to do this, but part of its power comes from laying bare the devices by which the Catholic hierarchy concealed abuse, moved offenders to different parishes –where they took advantage of the opportunity to ruin hundreds more lives – failed to report abusers to police, deceived parents, bullied and intimidated victims, insisted upon secrecy upon pain of excommunication (including forced non-disclosure agreements), and limited the payouts they made, as well as their complete betrayal of those who should have been seen as most important – all of which has led to revulsion among the Catholic and mainstream communities. Not for nothing has the abuse scandal been seen as the greatest challenge to the Church since the Reformation.

Time and again, Foster exposes church apologies as self-serving and insincere. As she writes of the cover-up, ‘it was deliberate, calculated and clandestine. It was international.’

Pell said before the Royal Commission into Institutional Responses to Child Sex Abuse that he objected to Catholics being the only cab on the rank. It is true that child abuse is a crime found in many institutions, but, as the Royal Commission observed, nine out of ten clergy cases reported to them were by Catholic perpetrators.

It found, as Foster cites, that 4,444 people came forward between 1980 and 2015 making child sexual abuse allegations (no one can imagine how many victims did not come forward) to ninety-three Catholic Church authorities relating to more than 1,000 Catholic institutions. The average age of victims was tenand-a-half years for girls, eleven-and-a-half for boys. The worst diocese, statistically, was Sale in Victoria, where fully fifteen per cent of priests were accused of being perpetrators. In terms of Catholic orders, an incredible forty per cent of Brothers of St John of God were accused, followed by Christian Brothers (22%), Salesians of Don Bosco (21.9%) and Marist Brothers (20.4%).

Much of the book is a narrative of the two hugely effective inquiries, the Victorian parliamentary one and the vastly bigger Royal Commission, and the Fosters’ reaction to the Church’s unfolding disgrace. Foster describes the methods of cover-up: secret archives, the ‘mental reservation’ that allows priests to lie under oath, the doctrine of the pontifical secret, victim blaming, euphemisms, destruction of documents, a multitude of ‘I don’t recalls’, and putting as much blame as possible on the dead. Another sad constant is the callous disdain the Fosters met from so many Australian prelates.

Before the Royal Commission reported, Anthony died in May 2017 of a catastrophic brain injury after a fall at Bunnings, another crippling blow for Chrissie. She writes: ‘Anthony was the most patient, intelligent, compassionate and loving man I had ever met. He was the kindest person in the world. The best. He was everything to me. We had been together for thirty-seven years.’

I am glad Foster acknowledges the role of the press in bringing clergy abuse to public attention, leading to the formal inquiries, then reporting them. When I began reporting on this in 2003 – and I was far from the first or most important – the police, the courts, and politicians didn’t really want to know. It was all too hard, and some had even been part of the cover-up. So the emergence of clergy sexual abuse in public consciousness over the next decade highlights how the media can still be a powerful force for good, though our role pales into insignificance against the courage and determination of survivors themselves and people like the Fosters.

Since the Fosters discovered the appalling secret of what happened to their children, their courage and determination has never flagged. As Chrissie Foster writes, ‘It had to be exposed because nobody should suffer as we and others had – there was no choice but to fight and that is what we did, two timid, ordinary people from the suburbs forced into a life beyond any nightmare. But we were good people, who simply could not allow it to continue. So we acted.’

In 2018 Foster received recognition for fighting the good fight when, with Chief Royal Commissioner Peter McClellan, she won the Australian Human Rights Medal.

Three decades after first taking up the cudgels, she is still furious that the high-ranking clergy who enabled and prolonged the sex crimes ‘of adult holy men against the small bodies of children for an average of 2.2 years each child’ have not been held to account. ‘Justice has not yet been served. How can our criminal law allow the Church hierarchy to just walk away from what it heartlessly orchestrated for decades, for centuries?’

It is the bishops (and bureaucrats) who emerge as the worst villains in this story. What could be more shameful or sad; what could more justly inspire rage? g

Barney Zwartz is a senior fellow of the Centre for Public Christianity and was religion editor of The Age for twelve years to December 2013.

the weeds, in the game’

A searching history of Macquarie Bank

The Millionaires’ Factory: The inside story of how Macquarie became a global giant

by Joyce Moullakis and Chris Wright

Allen & Unwin

$36.99 pb, 431 pp

Respected, not always loved, Macquarie is an exceptional ‘Australian and global financial success story’. So says Steve Harker, a rival investment banker from Morgan Stanley, quoted on the back of this book. The authors tackle an intriguing question: how a bonsai operation grew tall, dominating parts of the world of financial engineering. In 400 pages, with a useful index, plus 25,000 words of notes accessible via a QR code, Moullakis and Wright, two senior financial journalists, provide insights into Macquarie, Australia’s only significant global financial institution, which today directly employs more than 17,000 people in thirty-three countries.

The authors explain how and why Macquarie became what it is today. As the authors say of so many of the investment operations the bank has spawned and owns: ‘Macquarie is on the ground, in the weeds, in the game.’ This is a well-researched, gossipy, perceptive account of Macquarie. It is fascinating to read how in just a few decades the business moved from specialist domestic corporate adviser, and money market and bullion operator, to the world’s leading non-governmental operator of infrastructure assets.

The idea of an ‘inside story’, as suggested by the subtitle, points to cooperation from within the bank, with the four former CEOs and many other veterans and current players giving their views through interviews. Sometimes the authors’ interpretations read like Macquarie speaking notes, but the authors try commendably to offer a fuller picture, frankly admitting at times how the reader might be confused by the complexities of some Macquarie products and strategies.

To date, only Lewis D. Solomon’s The Promise and Perils of Infrastructure Privatization (2009) has covered in book form Macquarie’s history. But Solomon, the Van Vleck Research Professor of Law at the George Washington University, mostly concentrated on the infrastructure funds side of Macquarie. He was persona non grata within Macquarie when doing his research. Solomon questioned the efficacy of the Macquarie model, just as the unfolding Global Financial Crisis (GFC) implicitly did.

Perhaps the most notorious modern book on Western investment banking is Michael Lewis’s Liar’s Poker (1989), which is about his experiences on the trading desks of Salomon Brothers in London and New York. The anecdotes in that part-memoir, part-analysis suggest that investment bankers are masters at taking advantage of each other and of an undiscerning public. Psycho- pathic, misogynistic, sexist, bullying, and testosterone-charged are some of the words that spring to mind while reading Lewis – as they sometimes do when confronted with parts of Macquarie’s operations here, notwithstanding Macquarie’s purportedly high governance and behavioural standards.

Considering Lewis’s book, and those of many copycats, it might be reasonable for Macquarie executives to wonder what good will come from nosy journalists intent on explaining a complicated history, especially when there are bound to be skeletons, errors, ethical dilemmas, ‘cutting corners’ stories, and scandals to be revealed.

From all appearances, a dance of co-operation, autonomy, detailed research, and independence occurred in the writing. Thankfully, despite hagiographic touches, the dreariness of complete co-option is mostly avoided. The chapters are jointly written, apart from one by Wright focused on an American road trip, surveying the variety of Macquarie’s operations, and another by Moullakis, on Macquarie’s Australian businesses.

Interestingly, the authors suggest that Macquarie is ‘unique in a completely different way every decade or so, usually in order to get ahead of a trend that hasn’t even happened yet’. So, what is the Macquarie story? There are the pre-Macquarie (1969–85) and post-Macquarie phases (from 1985).

First, Hill Samuel, a relatively small but innovative UK investment bank, set up shop in Australia in 1969 and continued under majority London ownership until the mid-1980s. In 1971, two Australian Harvard MBA graduates, David Clarke and Mark Johnston, were recruited to jointly run Hill Samuel Australia. They were joined by Australian Harvard MBA graduates Tony Berg (1972) and Allan Moss (1977), who became the first and second Macquarie CEOs respectively.

In the late 1970s, ‘entrepreneurial’ and ‘banking’ were antithetical in Australia. According to Moss: ‘The Australian dollar hadn’t floated. Stockbrokers could not be owned by companies. There was strict bank regulation. Almost all business was very domestic.’ Then a revolution unfolded in domestic financial markets. In the early 1980s, Australian conservative governments cautiously explored the potential benefits of liberalising numerous financial regulation restrictions. Action came under the Hawke government with the floating of the Australian dollar on 12 December 1983, abolition of fixed-rate commissions in stock-broking, and a host of other reforms that blasted open the Australian economy.

In seeking an Australian banking licence, Hill Samuel Australianised the business, selling down its ownership, prior to obtaining its licence in 1985. By then, Berg as Macquarie’s first CEO and Clarke as Executive Chair were in charge. Hill Samuel Australia was rebranded as Macquarie Bank. The name commemorated one of Australia’s greatest reforming colonial governors. The ‘holey dollar’ became Macquarie Bank’s symbol. In 1812, Governor Macquarie, addressing a currency shortage, imported 40,000 Spanish reales, had the centre cut out of each and the coins counter-stamped, the outer ring becoming the holey dollar and the centre being named the ‘dump’. Creative financial innovation attracted Berg and Clarke to that tale.

This is a well-researched, gossipy, perceptive account of Macquarie

The duo put their stamp on recruitment, remuneration, risk control, and risk taking. For new recruits, Clarke insisted on psychometric evaluation, testing numeric and verbal ability, as well as examination for behavioural style and logic skills.

With remuneration, a profit-share approach was instigated, with short- and long-term incentives aimed at retaining key staff. Effectively, half the bank’s profit went to its employees.

Moullakis and Wright credit Berg’s risk-assessment processes with avoiding relationships with spivs and chancers from Western Australia and Queensland. The market crash of October 1987 and the business collapses of the over-leveraged Bond, Connell, and Skase empires, and others of that ilk, vindicated Berg’s reluctance to engage with them. Berg had standards.

In early 1987, Macquarie issued a document called What We Stand For, which set out ethical guardrails as well as principles covering credit, finance, operational and regulatory risks. ‘When the bank is acting as an agent the client relationship must come ahead of the house account.’ Berg was driven, creative, personable; his philosophical and wider interests shaped the organisation.

In this period, the idea of spotting ‘adjacency’ – businesses complementary to those already started – was popularised internally. Promoting decentralised entrepreneurship within strict

Be seen in ABR

There’s never been a better time to advertise with ABR and make an impression on our readers. Print, digital, and audio advertising options are available for 2023.

Contact us for a tailored package today. abr@australianbookreview.com.au risk boundaries became the bank’s hallmark. ‘A lot of the growth strategy was an options play,’ one interviewee said.

In 1986–87, the bank’s future third and fourth CEOs, Nicholas Moore and Shemara Wickramanayake, joined Macquarie.

Some telling observations from the book: ‘Fees would become central to the Macquarie story. Sometimes they would become too central’; ‘if Macquarie loved one thing, it was a tax angle’; in Australia, ‘there is no other market in the world where the level of individual literacy around tax effectiveness is so high’.

Moss, who took over as CEO from Berg in 1993, presented ‘an avuncular and likeable clumsiness’. He expanded operations exponentially.

International expansion started with cross-border leases and structured finance. Mostly in Victoria, between 1995 and 1998, $29 billion of state assets were sold. Macquarie played a role advising and initiating public-private partnerships. On the subject of the M2, the privately funded toll road in Sydney’s northwest, then deputy managing director John Caldon’s lament is quoted: ‘We’ve done all this fantastic stuff. We’ve done half a dozen financial innovations nobody has ever seen before. And we made, like, four or five million bucks.’ This led to Macquarie becoming a developer, a fund manager, an example of adjacency. Another case is the Industrial Property Trust of Australia, initially managed by Macquarie, which listed in 1993, and ultimately merged with a rival and morphed into Goodman Group, the world’s largest industrial property manager. On 29 July 1996 Macquarie was listed on the ASX and the Infrastructure Trust of Australia, Macquarie’s first managed infrastructure fund vehicle, was added on 16 December 1996.

Sometimes good luck happens. Two instances are highlighted. In 1998 Macquarie’s dynamic rival, Bankers Trust Australia (BT), a subsidiary of its American parent, was in play. In Alan Moss’s words, ‘our most formidable opponent’ was purchased in 1999 by Macquarie for a reputed A$100 million. It was transformational: 450 talented employees transferred across. Moss explained to doubtful transferee John Walker, who went on to build Macquarie’s huge Korean operations: ‘We make a lot of money.’ Suddenly, there were new offices in Chicago, Vancouver, Sao Paolo, Tokyo, and Cape Town.

A second example is Kvaerner, the Anglo-Norwegian engineering and construction conglomerate, temporarily in distress, which sold most of its infrastructure assets in the United Kingdom to Macquarie in 1999 – from which a global infrastructure business emerged, including the M6, the London to Birmingham toll road. Impressed by their infrastructure expertise, the Ontario Teachers’ Pension Plan and other large Canadian pension funds backed Macquarie investment deals. To 2022, Macquarie had raised C$40 billion from Canadian pension funds.

Leo de Bever at Ontario Teachers’ was an early champion. Along the way, as he told the authors, ‘they became too greedy’. He was critical of continuous regearing and the refinancing of assets, with Macquarie earning new fees. In sum, he argued short-term maximisation of profits compromised long-term relationships. The authors observe that Macquarie ‘found a way to take fees from every possible angle on every deal, and that it had conflicts’.

In 2002, Virgin airlines criticised Macquarie’s management of Sydney airport, another Macquarie acquisition. At issue was the cost of Virgin’s access to Sydney airport terminals. Virgin then posted billboard advertisements: ‘Macquarie: what a bunch of bankers.’ Ex-Bankers Trust executive Chris Corrigan accused Macquarie of striving to find ‘new and improved ways of gouging money out of the public’. The authors allude to the souring, popular sense that some privatisations resulted in higher costs and poorer services.

One awestruck description of Nicholas Moore summarises his technique at meetings: ‘probe, look for the weaknesses, test the information, test the people’. Some critics are cited. Ex-insider Oliver Yates states: ‘When you’re doing the first deal or the first type of transaction, or the first new asset, it’s a lot more complex than doing the sixteenth airport or the twenty-fifth railroad.’ So why should executive remuneration be sky-high for such repeat transactions?

The impact of the GFC saw the share price drop, accompanied by growing pressures on funds management operations. Businesses were sold off and/or recapitalised. The Australian government’s guarantee to the Australian banking sector helped. Off the back of this, Macquarie raised $25 billion of new loans for clients, effectively all government-guaranteed . In May 2009, a healthy $540 million raised in extra capital was a seminal moment in stabilising confidence in Macquarie.

The book, sometimes probingly, other times lightly, covers controversies, rogue behaviour, and evolving business strategies.

Macquarie’s future in energy and Environment, Social and Governance (ESG) is outlined. Nick O’Kane, who acquired energy businesses across America as the basis of a thriving business, is notably discussed.

Under-explored is how the backgrounds of each of the seemingly calm-in-a-crisis Macquarie CEOs enabled them to become so. Berg and Moss were of secular Jewish background, Moore a practising Catholic, Wikramanayake of Sri Lankan Tamil origin. A chapter is devoted to the latter. The mix of outsider and establishment affinity was part of the dynamic.

Former Australian Treasurer Peter Costello admits to being troubled by the bank’s complex structuring of businesses and products under the Macquarie banner to avoid tax: ‘Along the way, has it pushed the boundaries? Yes. Has it been a model citizen at all times? Well I am not saying that. But I’m pleased it’s still here. I’ll say we, Australia, would have been worse off if we didn’t have Macquarie.’ Besides Macquarie’s record, continuing operations, and innovations, its alumni have spread throughout numerous businesses in Australia and worldwide. This is part of its legacy.

In heft, historical perspective, humour, and hubris-telling, Gideon Haigh’s account of Bankers Trust Australia, One of a Kind: The story of Bankers Trust Australia 1969–1999 (1999) is the only other comparable account of an Australian investment bank’s origins, development, and operations. It is to be hoped that this readable book will inspire other researchers to delve into the history of this rich though relatively untapped vein of Australian corporate history. g

Michael Easson is Executive Chair of EG Funds Management and served on several of Macquarie’s subsidiary boards in property and infrastructure from 1994 to 2007. His new book, Whitlam’s Foreign Policy (Connor Court), will be published this month.